TronWeekly

Crypto World News

You are here: Home / Archives for Grayscale

Grayscale

VanEck Leads The Charge Towards Ethereum ETF With SEC Filing

by

VanEck, a well-known investment firm, has demonstrated a surge in the development of an Ethereum Exchange-Traded Fund (ETF) by filing an S1-A form with the Securities and Exchange Commission (SEC). According to Mr. Seyffart, a renowned analyst in the field of ETFs at Bloomberg who has been evaluating the issues, this step was another move in the course of VanEck’s relentless efforts to deal with the regulatory environment of the product.

The competition for the coveted spot for the Ethereum ETF is hotter up, with VanEck’s application joining the list of the other contenders, all chasing approval from the SEC. This trend reflects the increased interest that spot Bitcoin ETFs generate, pushing established financial institutions to look into Ethereum ETFs with renewed vig.

VanEck’s Ethereum ETF Application amidst SEC’s Scrutiny

A concurrent development includes the Ethereum ETF application from BlackRock, an investment colossus at the global level. Nevertheless, the SEC also adhered to a very careful stance, extending the examination period not only for BlackRock’s iShares Ethereum Trust but also for a prominent player in the industry, i.e., Grayscale Investments, Fidelity, and VanEck. 

The fact that BlackRock’s application decision has been delayed until March 10, 2024, by the regulator highlights the thoroughness of the inspection process as the Ethereum network prepares to switch to the proof of stake model. Also, the fears of market manipulation continue to linger.

Regulatory obstacles notwithstanding, investor sentiment remains very high. Experts view the odds of a spot Ethereum ETF approval by May as 60%. This confidence comes from a deadline that falls within only 240 days. It also comes on May 23, which marks the end of the review process for the proposals submitted by Ark/21Shares and VanEck.

However, there is an element of mystery as well in the SEC’s deliberations with Hester Peirce, the commissioner, who is a known advocate of a more lenient policy for Ethereum ETFs. The SEC’s remarks could be traced back to their experience with the spot Bitcoin ETFs as they seem to learn as they go, indicating a potential shift in stance after an increase in the application submissions.

Genesis Global Capital Seeks Court Approval For $1.6 Billion Asset Sale: Report

by

In a pivotal move to navigate its ongoing bankruptcy proceedings, cryptocurrency lending firm Genesis Global Capital has formally requested permission from the U.S. Bankruptcy Court in the Southern District of New York to sell approximately $1.6 billion worth of trust assets. The assets in question primarily consist of shares in various Grayscale trusts, including the Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust, and Grayscale Ethereum Classic Trust.

Renowned crypto journalist Colin Wu, through Wu Blockchain, brought attention to the detailed filing submitted by Genesis, a subsidiary of the Digital Currency Group. The filing unveils the composition of the assets slated for sale, with approximately $1.4 billion tied up in Grayscale Bitcoin Trust shares, an additional $165 million in Grayscale Ethereum Trust, and roughly $38 million in Grayscale Ethereum Classic Trust. Genesis has also sought to expedite the process, urging the court to address the sale motion at its next session scheduled for February 8.

This strategic move aims to optimize the value return for the company’s creditors and stakeholders amid the complex landscape of bankruptcy. Genesis’s decision to liquidate these assets follows its prior involvement in the cryptocurrency lending space, including collateral transferred to Gemini as part of the Gemini Earn program and assets acquired through the bankruptcy of Three Arrows Capital. Notably, the sale also encompasses efforts to legally reclaim 31,180,804 additional shares, valued at approximately $1.2 billion, previously pledged to Gemini but not transferred, pending a court decision on their ownership.

Genesis Sparks Industry Response

Responses to this initiative have come from various parties, including Gemini, which has labeled the filing as a significant step forward. This development gains additional significance following the recent approval of the Grayscale Bitcoin Trust as an exchange-traded product (ETP) on January 10, potentially impacting the valuation and liquidity of the assets up for sale.

Amid these strategic maneuvers, Genesis recently agreed to settle a lawsuit with the Securities and Exchange Commission (SEC) involving the payment of a $21 million fine, contingent upon the funds available post-bankruptcy. The lawsuit pertained to the operation of the Gemini Earn program, underscoring the regulatory hurdles faced by Genesis amidst its financial restructuring efforts.

The proposed asset sale emerges as a critical component of Genesis’s broader strategy to address financial challenges and meet obligations to creditors. By liquidating holdings in the Grayscale trusts, Genesis aims to capitalize on current market conditions and regulatory developments, optimizing the recovery for its stakeholders in this dynamic chapter of the cryptocurrency landscape.

Grayscale Bitcoin Trust’s ETF Conversion Pays Off For Hedge Funds

by

Some hedge funds made a fortune by investing in the Grayscale Bitcoin Trust (GBTC) before it became an exchange-traded fund (ETF) tracking Bitcoin. According to Reuters, hedge funds bought shares in GBTC between 2021 and 2023, expecting its price to soar once the Securities and Exchange Commission (SEC) approves the spot bitcoin ETF.

Grayscale, trying to convert its trust into an ETF since 2016, sued the SEC in 2022 after the regulator rejected its application. Grayscale won the lawsuit in August 2023, and the SEC finally gave the green light to U.S.-listed ETFs tracking bitcoin in January 2024.

Before the approval, GBTC was trading at a huge discount on its underlying assets, reaching almost 50% in December 2022, according to data platform YCharts. The discount was partly due to the collapse of the crypto exchange FTX, which affected the liquidity and demand for GBTC. Hedge funds saw this as an opportunity to profit from the price gap, which they expected to close once the ETF approval was granted.

Hedge Funds’ Strategic ETF Moves

According to Reuters, about 20 hedge funds, ranging from small to large, executed this trade. One of the hedge funds that participated in the trade was Fir Tree Partners, which had $3 billion in assets under management. A person familiar with the matter said that Fir Tree invested $60 million in GBTC in the last quarter of 2022 when it was trading at a 42% discount on its assets.

The source said that Fir Tree began to exit the position in 2023 after the court ruling in favor of Grayscale. According to the source, the firm sold its entire stake in January 2024 following the ETF conversion. Another hedge fund that profited from the trade was Hunting Hill, which bought GBTC when it was trading at a 42% discount and sold it when it narrowed to 7% last year, a source familiar with the matter said.

The founder of a U.S.-based macro hedge fund, who also did the trade, told Reuters that he was confident that the ETF approval would happen after the court decision in August 2023. He called it “the trade of a century.” However, not all the money that went into GBTC stayed in the Bitcoin space. Many hedge funds were among the investors who withdrew their money from GBTC after it became an ETF.

Related Reading | Bitcoin Holds Steady Amidst S&P 500 Highs: Analysts Skeptical of $40,000 Rebound

Analyst Makes Bullish Bitcoin Prediction Amidst Market Volatility

by

In a pivotal move renowned for creating the Bollinger Bands indicator, John Bollinger has taken to the X social media platform to deliver an optimistic forecast for the global cryptocurrency community. In a recent X post, he expressed confidence in a forthcoming halt to the ongoing Bitcoin sell-off.

BTC experienced a noteworthy surge, marking a 5.52% increase and surpassing the $42,000 price threshold. However, the bullish momentum was short-lived, as BTC retraced to $41,429 overnight. Subsequently, another ascent occurred, placing BTC in the $41,837 range at the reporting time.

NEYQYvd2BWpY8zSLlbGOiy4gFV1jVFdvqaEC2jQhAAYWhK5u7B34oDTyYWozs0mqMtq1Cabephk229mW5fC QMcSsj7uBGWf31Un3besswR9EAb9gXRwtv0rfm8upkCVmC fK UD2pDoHE0gkWyfo8

Source: TradingView

Bitcoin’s Rollercoaster Ride

Bitcoin has witnessed a substantial uptick of 7.86%, rising from the $38,705 price level. This upward trajectory follows a period in which traders and investors divested portions of their BTC holdings. The catalyst for this sell-off was the American Securities and Exchange Commission’s approval in mid-January for spot Bitcoin ETF issuers to trade exchange-traded funds linked to the spot price of BTC.

A significant player in the crypto ETF landscape, Grayscale, has been experiencing a decline in its Bitcoin holdings. Following the SEC’s approval, BTC initially surged above $42,000 but faced a sudden downturn as traders sought to capitalize on profits. Some investors redirected funds to new Bitcoin ETFs offered by prominent financial institutions like BlackRock, Fidelity, VanEck, Ark Invest, and other Wall Street hedge funds, totaling 11 in number.

Notably, Grayscale Bitcoin Trust spot ETF stands out as an exception. With the conclusion of the mandatory lock-up period for customers’ BTC, Grayscale clients have begun substantial withdrawals from the GBTC Trust. Concurrently, Grayscale itself has been offloading substantial amounts of Bitcoin.

In the last 24 hours, nearly $1 billion worth of BTC has been transferred to Coinbase Institutional through four sizable transactions executed by anonymous whales. Simultaneously, an equivalent amount of BTC was withdrawn from the platform in 13 transfers, each involving approximately 1,400 BTC. This surge in BTC whale activity coincides with the resumption of an upward trajectory for BTC, signaling heightened market dynamics in the cryptocurrency space.

SEC Chair Gensler Clarifies Bitcoin ETF Approval; Ethereum’s Fate Uncertain

by

In a media briefing on Wednesday, Securities and Exchange Commission (SEC) Chair Gary Gensler clarified that the agency’s recent approval of spot bitcoin exchange-traded products (ETFs) exclusively applied to bitcoin and not other cryptocurrencies. Addressing speculation about the potential approval of spot Ethereum ETFs, Gensler emphasized that the decision was specific to Bitcoin and should not be interpreted differently.

9261423417 dd9bc41abb o 2

Bitcoin ETF Approval and Improved Disclosure

The SEC’s approval of Bitcoin ETFs on January 10 followed a D.C. court directive to re-review Grayscale’s spot Bitcoin ETF application. Gensler highlighted enhanced investor disclosure for Bitcoin funds, emphasizing the move to stock exchanges from over-the-counter markets, leading to increased competition and lower fees.

Crypto experts have been divided on the prospects of a spot Ethereum ETF, with some optimistic about a possible SEC approval as early as May. Major financial players like Fidelity and BlackRock have submitted spot Ethereum ETF applications in recent months.

Meanwhile, the SEC is actively involved in legal battles against crypto exchanges Binance and Coinbase. The agency accused Binance Holdings and its former CEO, Changpeng Zhao, of various offenses, including lying to customers and operating as an unregistered exchange. The SEC also asserted that 12 tokens on the platform, including BNB and BUSD, qualify as securities.

Coinbase, too, faced SEC litigation for allegedly functioning as an unregistered exchange, broker, and clearing agency. Gensler refrained from commenting on ongoing court proceedings, deferring to enforcement staff and litigators. However, he urged caution among investors, warning that crypto security tokens might lack proper disclosures, particularly from non-compliant operators.

In a separate development, the SEC recently implemented stringent regulations for Special Purpose Acquisition Companies (SPACs) with a 3-2 commission vote. These regulations aim to enhance legal responsibilities for SPACs, often criticized as “blank-check companies.” SPACs, designed to raise capital for acquiring private entities, have faced scrutiny for sidestepping traditional IPO regulatory standards.

The SEC’s latest moves underscore a growing focus on regulating various aspects of the cryptocurrency and financial markets, reflecting a commitment to investor protection and market integrity.

Related Reading | BlackRock Bitcoin ETF Boosts Holdings To $1.59B With Coinbase Transfer

Grayscale Bitcoin ETF Loses $579 Million In Outflows

by

The Grayscale Bitcoin Trust, which recently became the first US ETF to invest directly in Bitcoin, has faced massive outflows of over $579 million in its first week of trading, according to Bloomberg. This contrasts sharply with the other nine spot Bitcoin ETFs, which have attracted nearly $1.4 billion in inflows.

The Grayscale Bitcoin Trust, which was previously a trust that traded at a premium to its net asset value, received approval from the US Securities and Exchange Commission to convert to an ETF last week. This allowed investors to redeem their shares at the market price rather than paying a fee to Grayscale.

As a result, many investors decided to take profits from their holdings, as the fund’s shares traded at a discount to its net asset value after the conversion. Bloomberg reported that over $2.3 billion worth of GBTC shares exchanged hands on its first day as an ETF, but the outflows indicate that much of that volume was due to selling.

“Thanks to the ETF conversion this is the first time we’ve had clear sight into flows of GBTC,” said James Seyffart, an ETF analyst at Bloomberg Intelligence, who observed that investors might be engaging in profit-taking.

Grayscale Faces Competition From Cheaper Alternatives

The outflows from Grayscale’s ETF also reflect the increased competition from other issuers who have launched cheaper and more efficient spot Bitcoin ETFs. Grayscale’s ETF charges an expense ratio of 1.5%, making it the most expensive US ETF that invests directly in Bitcoin. The second-most expensive fund, the VanEck Bitcoin Trust, charges only 0.25%.

Grayscale has dominated the market for regulated Bitcoin investing for over a decade. Now that other issuers have come to market, we are naturally seeing some rotation into these new products […] Total net inflows into Bitcoin investment products are what matters for prices, not substitution from one product to another, said Zach Pandl, Grayscale’s managing director of research.

Despite the outflows from Grayscale’s ETF, the demand for spot Bitcoin ETFs remains strong, as evidenced by the inflows into the other funds. BlackRock’s IBIT, which launched on the same day as Grayscale’s ETF, has pulled in nearly $500 million in its first two days of trading, making it the largest spot Bitcoin ETF by assets. Fidelity’s FBTC, which debuted a day later, has received roughly $421 million in inflows.

The inflows suggest that even outside of potential seed funding from fund issuers, investors are eager to gain exposure to Bitcoin in a physically backed ETF, which offers lower costs, higher liquidity, and better security than other vehicles.

Screenshot 2024 01 17 145445
Source: Bloomberg

Bloomberg Intelligence forecasted that Grayscale’s ETF will lose over $1 billion in outflows over the coming weeks, but Seyffart said that “lots of this capital will find its way back into other Bitcoin exposures.”

Related Reading | Dogecoin Price Prediction 2024: Is This The End Of The Road For Doge?

Historic Week As Bitcoin Spot ETFs Surpass $10B In Trading Volume In 3 Days

by

In a historic week for the cryptocurrency market, U.S. Bitcoin spot exchange-traded funds (ETFs) have witnessed a staggering trading volume of nearly $10 billion within just three days. Analysts have closely observed the performance of major ETFs, including Grayscale GBTC, BlackRock’s IBIT, and FBTC, as the market experiences both highs and lows.

Bloomberg analyst James Seyffart reported that the total trading volume of U.S. Bitcoin spot ETFs reached $9.771 billion, with Grayscale GBTC leading the pack at $5.174 billion, followed by BlackRock’s IBIT at $1.997 billion and FBTC at $1.479 billion. Seyffart characterized these launches as “very successful,” acknowledging Wisdomtree’s lower asset value but noting it’s only the third day, terming it a “LONG race.”

Eleanor Terrett, a journalist at FoxBusiness, engaged Seyffart in a discussion on the perceived success of the launches. Seyffart emphasized that, by most metrics, the ETFs had achieved significant success, with the exception of Wisdomtree, which he deemed as a potential contender in the longer term.

Rollercoaster Ride For Bitcoin

The entry of ten new spot ETFs into the U.S. market has ushered in a period of unprecedented volatility for Bitcoin. Glassnode’s recent report highlighted the roller-coaster ride, showcasing both multi-year highs and year-to-date lows for Bitcoin prices. The SEC’s approval of these ETFs marked a pivotal moment, bringing traditional finance further into the realm of cryptocurrency.

However, the approval process was not without its share of drama, with false starts on January 9th and 10th. BTC prices experienced spikes and subsequent sell-offs as confusion ensued. Eventually, full confirmation was received, and trading commenced on January 11th.

image 47

Over the first two days of trading, combined spot ETF volumes exceeded $7.823 billion, attracting over $1.4 billion worth of assets under management (AUM). Despite outflows from the now-converted GBTC ETF product, GBTC remains a dominant force, accounting for approximately 57% of the total trade volume.

The total holdings of U.S. spot ETFs now include a substantial 644,860 BTC, equivalent to approximately $27.2 billion, constituting 29.7% of global ETF holdings after just two days of trading. Analysts argue that this marks one of the most significant ETF launches in history, signaling a new phase in Bitcoin’s maturation process.

image 48

As Bitcoin investors continue to debate the impact of these events, market indicators such as futures open interest, options market dynamics, and long-term holder behavior suggest a complex landscape. With the ETFs now in play, the question remains whether the influx of demand will sustain Bitcoin’s upward trajectory, challenging the notion that these developments were already priced in.

Related Reading | Binance Thailand Unveils Trading Opportunities in the World of Cryptocurrency

Bitcoin Price Plummets As Grayscale Trust Redeems $41M In BTC

by

As Bitcoin prices abruptly plunged on January 12th, the Grayscale Bitcoin Trust (GBTC) moved over $41 million worth of the cryptocurrency to various wallets and exchanges. This massive outflow of funds occurred just one day after GBTC-authorized participants gained the ability to redeem shares for actual Bitcoin holdings.

According to blockchain analytics platform Arkham Intelligence, Grayscale shifted 894 BTC worth $41 million to a Coinbase Prime deposit wallet on January 12th. Additionally, the trust sent 2,607 BTC valued at $119 million to other wallets lacking previous transaction histories. These two withdrawals represent approximately 0.6% of GBTC’s estimated $27 billion assets.

While Grayscale has never publicly disclosed its wallet addresses, Arkham believes the identified wallets belong to the trust. If accurate, this data indicates substantially greater outflows than the amounts detected. For instance, if 20% of GBTC’s holdings were redeemed, nearly $5 billion in sell pressure could hit the market.

Bitcoin Price Tanks As Outflows Occur

On the same day as Grayscale’s withdrawals, Bitcoin prices suddenly plunged from around $46,000 to slightly above $43,000. Currently, bitcoin is trading at $42,690, with 7% down within the last 24 hours.

BTC 1D graph coinmarketcap 2
Source: CoinMarketCap

Some social media speculation tied GBTC’s newly enabled redemptions to this price collapse. For example, trader Fomocap theorized that investors dumping $25 billion worth of GBTC shares triggered mass selling. Others highlighted how even the modest volumes detected might lead to sustained downward pressure.

One possible incentive for one versatile member of shareholders to stand behind GBTC’s coins is the, in reality, capricious low cost of its shares relative to the underlying BTC valuations. For example, in October, at some unspecified time, shares traded at a perilous 16% bargain to their web asset worth.

After extra Bitcoin-centered ETFs started trading on January 11th, authorized members gained the selection to cash out accrued GBTC shares for the raison d’etre variable for the real right 11th unique cryptocurrency. In any case, persevering because the key ranges of observed withdrawals hitherto comprise only an infrequent bite of complete assets. The lingering impacts stay as past day.

Related Reading | BlackRock CEO Praises Bitcoin As A Hedge Against Government Tyranny

Bitcoin Dominates As Crypto Investments Surge: $151M Inflows In 2024’s First Week

by

In a promising kick-off to the year 2024, digital asset investment products have witnessed a significant surge, with total inflows reaching a noteworthy $151 million in the first week alone. The latest data, as reported by the CoinShares Digital Asset Fund Flows Weekly Report, sheds light on the dominance of Bitcoin in attracting the lion’s share of these inflows.

The report reveals that the cumulative inflows into digital asset investment products have now reached a substantial $2.3 billion since the conclusion of the Grayscale vs SEC lawsuit. This accounts for 4.4% of the total assets under management (AuM). Notably, the launch of the spot-based ETF in the United States is yet to occur, but the majority of the inflows, 55%, originated from US exchanges. Germany and Switzerland also played significant roles, contributing 21% and 17% of the total inflows, respectively.

Bitcoin Leads The Pack

Bitcoin emerged as the primary beneficiary, witnessing a massive influx of $113 million in the first week of 2024. Over the past nine weeks, Bitcoin’s total inflows have accounted for 3.2% of the AuM. Interestingly, the scenario for short-Bitcoin investment products took an unexpected turn, experiencing outflows totalling $1 million in the first week of the year. This contradicts the anticipation of a “buy the rumor, sell the news” event surrounding the potential launch of the ETF in the US. Surprisingly, outflows over the last nine weeks amounted to a substantial $7 million.

image 22

Ethereum, the second-largest cryptocurrency, also experienced positive sentiment, with inflows totalling $29 million in the first week. Over the past nine weeks, Ethereum’s cumulative inflows reached $215 million, signalling a notable shift in investor sentiment. However, Solana faced a less favourable start to the year, with outflows totalling $5.3 million.

Several altcoins witnessed notable inflows during the period, including Cardano, Avalanche, and Litecoin, attracting $3.7 million, $2 million, and $1.4 million, respectively. In addition to individual cryptocurrencies, blockchain equities displayed a strong performance, attracting $24 million in inflows over the first week of 2024. The robust start to the year for both digital assets and blockchain equities suggests a positive outlook for the broader cryptocurrency market as it continues to attract significant investor interest.

Related Reading | Chainlink’s Potential: Analysts Predict 10x Surge In Upcoming Bull Run

Grayscale Unveils New Crypto Fund Weights, Adds XRP and AVAX

by

In a recent development, Grayscale Investments, a global leader in crypto asset management, announced updated weightings for key funds, including the Grayscale Digital Large Cap Fund (GDLC), Grayscale DeFi Fund, and Grayscale Smart Contract Platform Ex-Ethereum Fund. Notably, GDLC saw the addition of Ripple’s XRP and Avalanche (AVAX) to its portfolio, aligning with the CoinDesk Large Cap Select Index methodology during the fourth quarter of 2023 reviews.

Per a recent report, the adjustments in GDLC’s holdings included the removal of Polygon (MATIC) during the latest rebalancing. As of January 4, 2024, GDLC’s primary fund components showcase Bitcoin (BTC) dominating at 69.15%, followed by Ethereum (ETH) at 21.90%. The fund also diversified into Solana (SOL) at 3.65%, XRP at 2.54%, Cardano (ADA) at 1.62%, and the recently added Avalanche at 1.14%.

Grayscale DEFG Fund Reshapes Portfolio Composition

Similarly, the Grayscale DeFi Fund (DEFG) underwent changes, shedding the Curve DAO Token (CRV) from its portfolio in line with quarterly rebalancing. Presently, DEFG highlights Uniswap (UNI) leading at 41.11%, with Lido (LDO) at 23.90%, MakerDAO (MKR) at 13.39%, Aave (AAVE) at 12.63%, and Synthetix (SNX) at 8.97%.

Conversely, Grayscale’s GSCPxE Fund reported an unchanged portfolio, featuring a significant share in Solana at 44.54% and Cardano (ADA) at 19.77%. Other assets included Avalanche at 13.89%, Polkadot (DOT) at 9.75%, Polygon at 8.25%, and Cosmos (ATOM) at 3.80%.

The filing of a new S-3 form by Grayscale on Tuesday caught attention, signaling an update on their efforts to convert GBTC into a Spot Bitcoin ETF. This followed Chairman Barry Silbert’s recent departure, prompting amendments to comply with the SEC’s cash-only orders.

Furthermore, GBTC submitted a free writing prospectus (FWP) to the SEC on December 29, 2023, coinciding with similar updates from other spot Bitcoin ETF issuers. CEO Michael Sonnenshein affirmed their readiness for an ETF in 2017, partnering with authorized participants like Jane Street and Virtu.

Grayscale’s proactive adjustments in fund allocations and unwavering commitment to regulatory compliance signify its agile approach to adapt within the ever-evolving crypto domain. These strategic moves indicate their readiness to pivot swiftly in response to potential market fluctuations and to align with forthcoming regulatory developments, ensuring a poised stance amidst the shifting landscape of digital assets.